Returns and risks of U.S. bank foreign currency activities

Article Abstract:

Risk and return on U.S. banks' foreign currency positions are analyzed for situations involving risk created by exchange rate changes and foreign interest rate changes. Optimal selection of foreign currency positions is hypothesized such that banks' risk exposure could be minimized. Although portfolio returns in total were fairly positive, the banks' performance in foreign currency positions was lower than necessary. On the other hand such poor performance is not deemed vital to the bank, since bank failure as a result of poor foreign currency position has a zero (or near zero) likelihood. In a discussion of the research paper by James A. Brickley, the selection of risk measures is questioned and bank managers' level of concern over foreign currency positions is deemed to be minor.

Analysis, Conferences, meetings and seminars, International aspects, Risk (Economics), Risk management, Foreign exchange, Monetary policy, Return on investment, Rate of return, American Finance Association

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Ownership structure, deregulation, and bank risk taking

Article Abstract:

This paper investigates the relationship between bank ownership structure and risk taking. It hypothesized that stockholder controlled banks have incentives to take higher risk than managerially controlled banks and that these differences in risk become more pronounced in periods of deregulation. In support of this hypothesis, we show that stockholder controlled banks exhibit significantly higher risk taking behavior than managerially controlled banks during the 1979 - 1982 period of relative deregulation. (Reprinted by permission of the publisher.)

Methods, Management, Bank management

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Financial distress and bank lending relationships

Article Abstract:

The influence of higher corporate debt on the financial wellbeing of banks and borrowers is discussed.

Financial management, Science & research, Evaluation, Influence, Debt financing (Corporations), Debt financing, Company financing, Bank loans, Corporate debt

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